John Ward – Euroblown : The Madness Round-Up – 21 May 2012

It turns out that Richard Bruton’s mis-spoken answer given on Irish radio last week (about a second referendum if the first result is a ‘mistake’) was almost certainly a relatively honest bloke giving a straight answer – rather than a chap in doubt about the arse/elbow alignment.

Unaligned Irish politician Shane Ross argued in yesterday’s Irish Independent that Fine Gael has gone for a quick referendum (by May 31st) for two reasons: first, to get a yes vote before the ClubMed chaos makes such a vote madness for any sane Irish person, and (2) to ensure time for a Second Go before the Fiscal Treaty curtain comes down, leaving the Irish out of Angela Merkel’s Germanism Training Camp fiscal union.

Oddly enough – or perhaps quite deliberately – the IIF’s Charles Dallara was in Dublin last week, spreading doom and gloom about a Greek exit, and referring to the knock-on effect for Ireland as  “somewhere between catastrophic and Armageddon”. Dallara is, of course, the man who negotiated the Greek sovereign debt deal, and so he would say that: the last thing his organisation wants is a whole string of ClubMed and peripheral defaults under which his members wind up with diddly-squat: even an 85% discount on the original loan is better than zero.

Meanwhile, discussions about how to directly recapitalise/shore up eurobanks directly are back on the Big Boys’ agenda now that Francois Hollande has slithered onto the French podium. Monti, Rajoy and Barroso want this because they can see what’s coming, and flirty Francois wants it because his banks (especially CreditAg) are profondement dans la merde. So while before, she was simply outnumbered, Geli in Berlin is suurounded, and the Vth army no longer exists. The grenades are being lobbed through the Bunker’s back door. Frau Doktor’s unshakeable will is about to be shaken again, but probably not stirred.

A degree of urgency on this issue has been added by last week’s huge withdrawals of cash in Greece and Spain – what the FT this morning called ‘a slow-motion bank run’. Actually, there’s no such thing: like the gradual panic, a sign of early withdrawals will require just one bad bit of news to turn into a stampede involving small arms fire and terrified tellers.

Outside the eurozone but still inexplicably in the EU, UK Coalition politics show signs of getting a bit tetchy on the subject of the local dificulties being experienced by our friends in Brussels. Deputy Prime Minister Nick Clegg predicted that arguments in Britain about whether to pull out of the European Union would be “like a small side show compared to the rise of political extremism” in the next few years.

Reading the interview, it is clear that Tricky Nicky sees the British debate as getting in the way of his pet project by bringing up irritating little nit-picks like sovereignty, democracy and illiberal detainment/cross-border policing laws. It’s also obvious that he still regards the intrinsic problems of the euro and the EU as small hurdles a five-year could trot over on her pony, as opposed to the high-rise Beecher’s Brook they are.

However, if he wants to make our truculence bigger than a sideshow, there are now plenty of folks at the People’s Pledge willing to do so. What I find staggering is that Britain’s real situation  – the equivalent of having a debate about whether or not to hghtail it off Krakatoa now that the sea has started bubbling away somewhat menacingly – seems not to have penetrated what passes for his consciousness.

“Everybody should be more active,” opined Mr Clegg, “At the moment, what’s happening is you have one emergency summit after another, you have one election after the other, you have one bail out after the other. This cannot carry on.”

Crikey, this man’s mustard isn’t he? Right everyone, after three “Get Active”. No summits, no elections and no bailouts. Doesn’t sound very active to me. But then Nick is a Liberal Democrat.

But nil desperandum, because those Berlin minds are as open as ever. German Finance Minister Wolfie Schäuble is up for a frest start, and was discussing the way forward with his newly installed French counterpart, Pierre Moscovici in Berlin yesterday – as European Union leaders prepared for a summit meeting in Brussels on Wednesday. Herr Schäuble said afterwards, “We’re all very pleased that France wants to offer new initiatives with its newly elected president. The German government is ready to talk about anything”. Then he ruled out any measures involving increased debt.

This came after three short Hollande-Merkel sessions last week, in which both leaders looked for a solution to the jump-start growth vs more spending cuts impasse. They obviously conducted the chats in their respective languages, and got nowhere.

Last Friday, Dave ‘Soundbite’ Scameron told the eurozone’s members they should either make up or break up. The betting is very heavily on the latter.

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